Business Succession is a Team Sport

Episode Description:

If there’s one thing we know about your transition or succession journey, it’s that you can never do it alone. So many business owners try to take on too much of the work on their own, which makes the process much more difficult, if not impossible. In this episode, you’ll find out the value in bringing people you trust into the transition journey with you. Whether your successor is a family member or an internal employee, you have to work together to ensure that your business will continue to build and grow without you. Tap or click the play button below to listen to: Business Succession is a Team Sport.

Connect with Elizabeth and the Transition Strategists:
Website: https://transitionstrategists.com/
Facebook: https://www.facebook.com/thetransitionstrategists
LinkedIn: https://www.linkedin.com/company/transitionstrategists/
This episode was produced by Story On Media & Marketing: https://www.successwithstories.com.

Business Succession is a Team Sport Transcript 

[00:00:00] Elizabeth Ledoux: Hi, and welcome back to our podcast. Uh, today what we’re gonna be talking about is business succession and it being a team sport. I can’t tell you how many clients over the years I’ve worked with, who have taken on all of the responsibility for their business transition all by themselves. It, um, yeah, just, I can’t even think of one story to tell you.

[00:00:26] It just is almost everyone that I talk to. They come and they, they are ready to start to think about their transition from their business. They’re ready to start to work on it. And. They really are taking on too much, completely on their own. So that’s why I believe that business succession is a team sport.

[00:00:49] And when I’m talking about business succession in that context, um, it’s for business owners who want to transition to an internal person. So it’s either like an employee that they might wanna transition to, or a few employee. it could be family members or one family member that they’re trying to get involved and pass the business on to that particular person or group.

[00:01:17] And it also could be even a couple of people who have been partners for a long time, where one of them is ready to leave. And the other one is wanting to stay. and that happens very, very often in partnerships where you almost have this marriage for a long time, and then you want to have what would be a business divorce.

[00:01:39] We just hope that the business divorce is very happy and each one of you gets to go on, like the one that’s leaving gets to go on to their great next adventure. And the one who’s staying gets to keep a healthy, happy business. And that relationship continues to be, um, very strong and very good. So when I think about business succession, um, what I’d like to really have you understand is that it is a team sport.

[00:02:06] And the reason why is because there is transition and also succession. So when I talk to business owners, they believe that, and they use those two terms interchangeably. So succession and transition, they’re both the same. And so you had business transition, business succession. If you look up the definition of transition, what that really means is that a person is leaving something.

[00:02:35] So when they transition, they typically transition away from something and they’re moving on to something else. So if you can imagine leaving your business, that’s kind of interesting. Um, you need somebody to come into the business. Somebody who’s gonna take over the business. Otherwise the business is gonna die without you.

[00:02:56] So succession, that definition is someone who typically is receiving something or taking something on. And so in this, it’s a team sport, cuz you have to have somebody who’s leaving. could be a task or could be the entire business. You’ll also have to have somebody who’s gonna come in and take that over for it all to go well.

[00:03:20] So in your head, I’d like you to start to separate the idea of you transitioning and who is going to be your successor now in order to have both. Of those things. Um, you can think of the many wins, so. When you leave a business and, and even as you build and grow it, as you all know, I’m sure if you have a successful business and you’re working on continuing to make it grow, um, tasks that you used to do a few years ago, you don’t do anymore.

[00:03:55] Um, you’ve successfully transitioned those to somebody else and somebody else has successfully taken those on. So those are all working and you’ll continue to do that as you build and grow, um, And as you get towards that CEO level, right. And you’re that high level CEO, uh, you’ll have tasks that you need to do.

[00:04:17] And as you move up that ladder and let go of the things that are easily given to somebody else you end up at at the CEO level or the owner level, with things that are really hard to transition, um, things like. Well, one of the favorites, financial, um, financial cash flow, banking, finance, um, debt, those kinds of things.

[00:04:42] Those are pretty important things to the business. The other thing that people tend to find hard to transition or they transition last would be something like, um, uh, vision mission where we headed, how are we going to build and grow and funny story? I I’m a big skier. I love to ski and. Oh, gosh, couple years ago, I went skiing with a business owner.

[00:05:12] She was a great skier as well, and we had a beautiful day and on the lift pretty much all day long. I just kept talking to her about how she was gonna transition and that somebody was gonna come in and it took me all day to help her to really understand what it meant for her to give up the vision of the company and that somebody else someday was gonna come in and do that.

[00:05:37] Because without that the business doesn’t continue forward. It doesn’t continue to change in the environment and it doesn’t continue to grow. So. In your thinking, you know, really letting go and imagining that you will no longer have anything to do with this business at all, and who’s gonna hold it and who’s gonna take it forward.

[00:05:57] So that’s why it’s a team sport because they need you to help them get there and to be able to do that. And you need them to allow you to let go so that you can easily move forward and know that that business is gonna continue. Uh, the reason why I do this and you’ll find that to be true in all of my podcasts is because I believe.

[00:06:20] Business is the backbone of our country and it serves our communities. And so if businesses fail right, you transition out and your business fails. Imagine what that does to your community, to all the people that you serve, um, to whatever kids, programs, or philanthropy you, you give to every year to make sure that that works and all your employees and all the people and everybody that this business touches.

[00:06:51] So we know that you have to have both somebody transitioning and somebody coming in to have a successful transition. And I was telling you a little bit about the mini wins. You need to have somebody or some people who will come in and run the business and run the day to day and do your tasks. The other thing that you need is someone who’s willing to invest in this business.

[00:07:16] So somebody who’s willing to come in and be that entrepreneurial leader going forward. Um, who’s willing to buy you out, pay for the business and who also has the Val the equity or the means to do so. In an internal transition. We’ve found many, many ways to make people’s dreams come true with making it instead of an event, making it a journey.

[00:07:43] So they end up with this big, long timeline, because with time you have more options and you have more ability to help your ideal successor take over and buy you out. So. In this, the team sport is, yeah, let’s get somebody in and who can take over the tasks, but we also have to have a person in an internal transaction who can actually manage the equity and pay you out so that you can go have your next adventure.

[00:08:14] You can’t do this alone. We know that. Inviting others into it is extremely important. So with it being a team sport, you kind of have to tell the person, um, what the game is. So in order to invite somebody in, um, they need to understand. what they’re being invited into. So most of the time I’ll run into a business owner and they, uh, have had a conversation maybe with a potential successor, uh, could be an employee.

[00:08:49] And they say, you know, someday I would really like for you to own this business. And I think that that would be really great for you. Right. I, I would like to make that happen. And so I’d like to groom you for the business and I, I want you to, you know, someday own that, um, the person gets very excited. It kind of is a promise a little bit, but not exactly.

[00:09:10] And they really though don’t know what they’re saying yes to, or what they’re interested in, um, what they’re going to be able to do. There’s a story of a lady, um, years ago, and she absolutely knew that this person that was coming in was gonna buy her business and they had worked out. a little bit about how that might look a little bit about the timing, et cetera.

[00:09:39] And when we actually got to creating the strategy, right? This transition strategy is what I call it. And she actually had some of the details and understood things like the tax liabilities and what it would be like to be a partner. And, um, you know, the limited. Ability for her to make a decision until she could pay off a certain amount and get to where she could own a majority where she could actually make the decisions and how long that might take and those kinds of things.

[00:10:14] Um, she actually opted out the risk and the reward and the logistics of how that was gonna work. Uh, just wasn’t for her. So this business owner, this lady. She went all the way down the road. It was probably a couple of years talking to this potential employee owner saying, yes, you know, someday I’m gonna sell to you.

[00:10:38] And the, and the employee was like, yes, and I’m gonna buy it. And when we got to the roadmap and the roadmap was probably about two or three years long, um, the employee realizing some of the logistics actually said, no,

[00:10:54] The owner had to start over. So her timeline was basically completely blown up and she had to start from scratch. So you can’t do it alone and inviting other people in is crucial. This design and the idea of creating a roadmap that’s with intention, I think is very important. And. About a year and a half ago, published a book called it’s a journey.

[00:11:24] and there are three things that are in that book that are important. Um, one is the idea of putting people first. So, you know, if you’re gonna have a team sport and you’re gonna go do this, why not? Um, put people first and figure out who’s on the team and how, how, how do we make their lives amazing and happy because the business should be a vehicle to be able to do that.

[00:11:46] Um, so people first next one second one is its journey. A business transition, especially an internal business transition takes a while. Um, it’s it takes sometimes a year, two years. We’ve built timelines up to 10 years long, uh, just to help people to get their money together and get. Comfort of actually running the business and knowing that they can do it.

[00:12:17] And then the last one is I think a roadmap is your best tool, because if you have a roadmap, you can invite others in. So you can say, Hey, this is the journey we’re on. And these are the steps that we’re gonna make. And this is where we could run into some problems. And would you like to be on this journey with me because this is how we’re gonna do it.

[00:12:39] This is when we’re gonna have some transactions to you, and this is what potentially is gonna be expected of you. But also, these are the rewards that you can look forward to. Um, I think that that’s a much better invitation when you think about inviting people in and, um, making this a fun event over my years.

[00:13:03] There’s so many people that have made this so hard. I truly have been blessed to have been able to create roadmaps where people actually can have fun along this journey because it’s not the easiest road, but, um, there’s no reason why it can’t be a, a rewarding and fun road. So focus of this podcast is that business succession is a team sport.

[00:13:32] You don’t have to take all of it on yourself. You do have to be intentional and know what you want in order to invite others in. And as soon as you invite them in with the right information, then you become a team and you’re able to create a successful transition together because you need to transition out and you have to have a successor come in.

[00:13:58] Otherwise, as a business owner, you’re not leav. It’s too important to you. So what I’d like to ask you is I’d like to ask you to think about one, what you really want. What are your objectives in your transition, the things that are most important to you, and then two, who would you like to go on this journey with?

[00:14:22] Is there anybody that you know, that you would think would be great to do it with? And again, You know, take the example of a son or a daughter. Wow. What a great opportunity to spend some time together, create a business relationship that’s different than your, you know, parents, parent child relationship.

[00:14:41] So you get this business relationship and, um, you get to pass on a lot of knowledge and enjoy same thing with employees. you get to be the teacher mentor and they get to be the learners. And, um, in the end you see them go on and, uh, happy and with a great business and doing well. And then same with a partner you’ve been so long, you’ve been together for so long.

[00:15:06] Um, why leave poorly? Why not make it a true success and end correctly and, and with happiness. So anyway, I’d like for you to think about who would you like to go on this journey with? Because it’s a wonderful journey and one that will happen one way or another. So thank you for joining me for the podcast and I’ll look forward to seeing you next time.